119-s1040

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1040 Reported in Senate

    (RS) ]

<DOC>

 Calendar No. 43
119th CONGRESS
 1st Session
 S. 1040

To amend the Federal Trade Commission Act to prohibit product hopping, 
 and for other purposes.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 March 13, 2025

Mr. Cornyn (for himself, Mr. Blumenthal, Mr. Grassley, and Mr. Durbin) 
introduced the following bill; which was read twice and referred to the 
 Committee on the Judiciary

 April 10, 2025

 Reported by Mr. Grassley, with an amendment
 [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

 A BILL

To amend the Federal Trade Commission Act to prohibit product hopping, 
 and for other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Drug Competition Enhancement Act''.

SEC. 2. PRODUCT HOPPING.

    (a) In General.--The Federal Trade Commission Act (15 U.S.C. 41 et 
seq.) is amended by inserting after 

section 26 (15 U.S.C. 57c-2) the 
following:

``

SEC. 27. PRODUCT HOPPING.

 ``

    (a) 

=== Definitions. ===
-In this section:
 ``

    (1) Abbreviated new drug application.--The term 
 `abbreviated new drug application' means any application under 
 subsection

    (j) of 

section 505 of the Federal Food, Drug, and 
 Cosmetic Act (21 U.S.C. 355) or an application under subsection

    (b)

    (2) of such 

section 505 that seeks a therapeutic equivalence 
 rating to the reference product.
 ``

    (2) Biosimilar biological product.--The term `biosimilar 
 biological product' means a biological product licensed under 
 

section 351

    (k) of the Public Health Service Act (42 U.S.C. 
 262

    (k) ).
 ``

    (3) Biosimilar biological product license application.--
 The term `biosimilar biological product license application' 
 means an application submitted under 

section 351

    (k) of the 
 Public Health Service Act (42 U.S.C. 262

    (k) ).
 ``

    (4) Follow-on product.--The term `follow-on product'--
 ``
        (A) means a drug approved through an application 
 or supplement to an application submitted under 

section 505

    (b) of the Federal Food, Drug, and Cosmetic Act (21 
 U.S.C. 355

    (b) ) or a biological product licensed through 
 an application or supplement to an application 
 submitted under 

section 351

    (a) of the Public Health 
 Service Act (42 U.S.C. 262

    (a) ) for a change or 
 modification to, or reformulation of, the same 
 manufacturer's previously approved drug or biological 
 product that has an indication that is identical or 
 substantively similar to an indication of the same 
 manufacturer's previously approved drug or biological 
 product; and
 ``
        (B) excludes such an application or supplement to 
 an application for a change, modification, or 
 reformulation of a drug or biological product that is 
 requested by the Secretary or necessary to comply with 
 law, including sections 505A and 505B of the Federal 
 Food, Drug, and Cosmetic Act (21 U.S.C. 355a, 355c).
 ``

    (5) Generic drug.--The term `generic drug' means any drug 
 approved under an application submitted under subsection

    (j) of 
 

section 505 of the Federal Food, Drug, and Cosmetic Act (21 
 U.S.C. 355) or an application under subsection

    (b)

    (2) of such 
 

section 505 that seeks a therapeutic equivalence rating to the 
 reference product abbreviated new drug application.
 ``

    (6) Listed drug.--The term `listed drug' means a drug 
 listed under 

section 505

    (j)

    (7) of the Federal Food, Drug, and 
 Cosmetic Act (21 U.S.C. 355

    (j)

    (7) ).
 ``

    (7) Manufacturer.--The term `manufacturer' means the 
 holder, licensee, or assignee of--
 ``
        (A) an approved application for a drug under 
 

section 505
            (c) of the Federal Food, Drug, and Cosmetic 
 Act (21 U.S.C. 355
            (c) ); or
 ``
        (B) a biological product license under 

section 351

    (a) of the Public Health Service Act (42 U.S.C. 
 262

    (a) ).
 ``

    (8) Reference product.--The term `reference product' has 
 the meaning given the term in 

section 351
            (i) of the Public 
 Health Service Act (42 U.S.C. 262
            (i) ).
 ``

    (9) Ultimate parent entity.--The term `ultimate parent 
 entity' has the meaning given the term in 

section 801.1 of 
 title 16, Code of Federal Regulations, or any successor 
 regulation.
 ``

    (b) Prohibition on Product Hopping.--
 ``

    (1) Prima facie.--A manufacturer of a reference product 
 or listed drug shall be considered to have engaged in an unfair 
 method of competition in or affecting commerce in violation of 
 

section 5

    (a) if complaint counsel or the Commission 
 demonstrates in an action or proceeding initiated by the 
 Commission under subsection
            (c) that, during the period 
 beginning on the date on which the manufacturer of the 
 reference product or listed drug first receives notice that an 
 applicant has submitted to the Commissioner of Food and Drugs 
 an abbreviated new drug application or biosimilar biological 
 product license application referencing the reference product 
 or listed drug and ending on the date that is the earlier of 
 180 days after the date on which the generic drug or biosimilar 
 biological product that is the subject of the abbreviated new 
 drug application or biosimilar biological product license 
 application or another generic drug or biosimilar biological 
 product referencing the listed drug or reference product is 
 first marketed or 3 years after the date on which the follow-on 
 product is first marketed, the manufacturer engaged in either 
 of the following actions:
 ``
        (A) The manufacturer engaged in a hard switch, 
 which shall be established by demonstrating that the 
 manufacturer engaged in either of the following 
 actions:
 ``
            (i) Upon the request of the manufacturer 
 of the listed drug or reference product, the 
 Commissioner of Food and Drugs withdrew the 
 approval of the application for the listed drug 
 or reference product or placed the listed drug 
 or reference product on the discontinued 
 products list and the manufacturer marketed or 
 sold a follow-on product.
 ``
            (ii) The manufacturer of the listed drug 
 or reference product--
 ``
            (I) (aa) withdrew, discontinued 
 the manufacture of, or announced 
 withdrawal of, discontinuance of the 
 manufacture of, or intent to withdraw 
 the application with respect to the 
 drug or reference product in a manner 
 that impedes competition from a generic 
 drug or a biosimilar biological 
 product, which may be established by 
 objective circumstances, unless such 
 actions were taken by the manufacturer 
 pursuant to a request of the 
 Commissioner of Food and Drugs; or
 ``

    (bb) destroyed the inventory of 
 the listed drug or reference product in 
 a manner that impedes competition from 
 a generic drug or a biosimilar 
 biological product, which may be 
 established by objective circumstances; 
 and
 ``
            (II) marketed or sold a follow-on 
 product.
 ``
        (B) The manufacturer engaged in a soft switch, 
 which shall be established by demonstrating that the 
 manufacturer engaged in both of the following actions:
 ``
            (i) The manufacturer took actions with 
 respect to the listed drug or reference product 
 other than those described in subparagraph
        (A) that unfairly disadvantage the listed drug or 
 reference product relative to the follow-on 
 product described in clause
            (ii) in a manner 
 that impedes competition from a generic drug or 
 a biosimilar biological product, which may be 
 established by objective circumstances.
 ``
            (ii) The manufacturer marketed or sold a 
 follow-on product.
 ``

    (2) Exclusions.--Nothing in this section shall prohibit 
 actions that consist solely of--
 ``
        (A) truthful, non-misleading promotional 
 marketing; or
 ``
        (B) ceasing promotional marketing for the listed 
 drug or reference product.
 ``

    (3) Justification.--
 ``
        (A) In general.--Subject to paragraph

    (4) , the 
 actions described in paragraph

    (1) by a manufacturer of 
 a listed drug or reference product shall not be 
 considered to be an unfair method of competition in or 
 affecting commerce if the manufacturer demonstrates to 
 the Commission or a district court of the United 
 States, as applicable, in an action, suit, or 
 proceeding initiated by the Commission under subsection
            (c) (1) that--
 ``
            (i) the manufacturer would have taken the 
 actions regardless of whether a generic drug 
 that references the listed drug or biosimilar 
 biological product that references the 
 reference product had already entered the 
 market; and
 ``
            (ii) 
            (I) with respect to a hard switch 
 under paragraph

    (1)
        (A) , the manufacturer took 
 the action for reasons relating to the safety 
 risk to patients of the listed drug or 
 reference product;
 ``
            (II) with respect to an action described 
 in paragraph

    (1)
        (A)
            (ii) 
            (I) (aa) , there is a 
 supply disruption that--
 ``

    (aa) is outside of the control of 
 the manufacturer;
 ``

    (bb) prevents the production or 
 distribution of the applicable listed 
 drug or reference product; and
 ``
            (cc) cannot be remedied by 
 reasonable efforts; or
 ``
            (III) with respect to a soft switch under 
 paragraph

    (1)
        (B) , the manufacturer had 
 legitimate pro-competitive reasons, apart from 
 the financial effects of reduced competition, 
 to take the action.
 ``
        (B) Rule of construction.--Nothing in 
 subparagraph
        (A) may be construed to limit the 
 information that the Commission may otherwise obtain in 
 any proceeding or action instituted with respect to a 
 violation of this section.
 ``

    (4) Response.--With respect to a justification offered by 
 a manufacturer under paragraph

    (3) , the Commission may--
 ``
        (A) rebut any evidence presented by a 
 manufacturer during that justification; or
 ``
        (B) establish by a preponderance of the evidence 
 that--
 ``
            (i) on balance, the pro-competitive 
 benefits from the conduct described in 
 subparagraph
        (A) or
        (B) of paragraph

    (1) , as 
 applicable, do not outweigh any anticompetitive 
 effects of the conduct, even in consideration 
 of the justification so offered; or
 ``
            (ii) 
            (I) the conduct described in 
 paragraph

    (1) is not reasonably necessary to 
 address or achieve the justifications described 
 in clause
            (ii) of paragraph

    (3)
        (A) ; or
 ``
            (II) the justifications described in 
 clause
            (ii) of paragraph

    (3)
        (A) could be 
 reasonably addressed or achieved through less 
 anticompetitive means.
 ``
            (c) Enforcement.--
 ``

    (1) In general.--If the Commission has reason to believe 
 that any manufacturer has violated, is violating, or is about 
 to violate this section, or a rule promulgated under this 
 section, the Commission may take any of the following actions:
 ``
        (A) Institute a proceeding under 

section 5

    (b) .
 ``
        (B) In the same manner and to the same extent as 
 provided in 

section 13

    (b) , bring suit in a district 
 court of the United States to temporarily enjoin the 
 action of the manufacturer.
 ``
            (C) Bring suit in a district court of the United 
 States, in which the Commission may seek--
 ``
            (i) to permanently enjoin the action of 
 the manufacturer;
 ``
            (ii) any of the remedies described in 
 paragraph

    (3) ; and
 ``
            (iii) any other equitable remedy, 
 including ancillary equitable relief.
 ``

    (2) Judicial review.--
 ``
        (A) In general.--Notwithstanding any provision of 
 

section 5, any manufacturer that is subject to a final 
 cease and desist order issued in a proceeding to 
 enforce this section, or a rule promulgated under this 
 section, may, not later than 30 days after the date on 
 which the Commission issues the order, petition for 
 review of the order in--
 ``
            (i) the United States Court of Appeals 
 for the District of Columbia Circuit; or
 ``
            (ii) the court of appeals of the United 
 States for the circuit in which the ultimate 
 parent entity of the manufacturer is 
 incorporated.
 ``
        (B) Treatment of 

=== findings ===
-In a review of a 
 final cease and desist order conducted by a court of 
 appeals of the United States under subparagraph
        (A) , 
 the factual findings of the Commission shall be 
 conclusive if those facts are supported by the 
 evidence.
 ``

    (3) Equitable remedies.--
 ``
        (A) Disgorgement.--
 ``
            (i) In general.--In a suit brought under 
 paragraph

    (1)
            (C) , the Commission may seek, and 
 the court may order, disgorgement of any unjust 
 enrichment that a person obtained as a result 
 of the violation that gives rise to the suit.
 ``
            (ii) Calculation.--Any disgorgement that 
 is ordered with respect to a person under 
 clause
            (i) shall be offset by any amount of 
 restitution ordered under subparagraph
        (B) .
 ``
            (iii) Limitations period.--The Commission 
 may seek disgorgement under this subparagraph 
 not later than 5 years after the latest date on 
 which the person from which the disgorgement is 
 sought receives any unjust enrichment from the 
 effects of the violation that gives rise to the 
 suit in which the Commission seeks the 
 disgorgement.
 ``
        (B) Restitution.--
 ``
            (i) In general.--In a suit brought under 
 paragraph

    (1)
            (C) , the Commission may seek, and 
 the court may order, restitution with respect 
 to the violation that gives rise to the suit.
 ``
            (ii) Limitations period.--The Commission 
 may seek restitution under this subparagraph 
 not later than 5 years after the latest date on 
 which the person from which the restitution is 
 sought receives any unjust enrichment from the 
 effects of the violation that gives rise to the 
 suit in which the Commission seeks the 
 restitution.
 ``

    (4) Rules of construction.--Nothing in this subsection 
 may be construed as--
 ``
        (A) requiring the Commission to bring a suit 
 seeking a temporary injunction under paragraph

    (1)
        (B) before bringing a suit seeking a permanent injunction 
 under paragraph

    (1)
            (C) ; or
 ``
        (B) affecting the authority of the Federal Trade 
 Commission under any other provision of law.''.

    (b) Applicability.--

Section 27 of the Federal Trade Commission Act, 
as added by subsection

    (a) , shall apply with respect to any--

    (1) conduct that occurs on or after the date of enactment 
 of this Act; and

    (2) action or proceeding that is commenced on or after the 
 date of enactment of this Act.
            (c) Antitrust Laws.--Except to the extent subsection

    (a) establishes an additional basis for liability under the Federal Trade 
Commission Act (15 U.S.C. 41 et seq.), nothing in this section, or the 
amendments made by this section, shall modify, impair, limit, or 
supersede the applicability of the antitrust laws, as defined in 
subsection

    (a) of the first section of the Clayton Act (15 U.S.C. 12), 
or of 

section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to 
the extent that it applies to unfair methods of competition.
            (d) Rulemaking.--The Federal Trade Commission may issue rules under 

section 553 of title 5, United States Code, to define any terms used in 

section 27 of the Federal Trade Commission Act, as added by subsection

    (a) (other than terms that are defined in subsection

    (a) of such 

section 27).
 Calendar No. 43

119th CONGRESS

 1st Session

 S. 1040

_______________________________________________________________________

 A BILL

To amend the Federal Trade Commission Act to prohibit product hopping, 
 and for other purposes.

_______________________________________________________________________

 April 10, 2025

 Reported with an amendment